How Does Pet Insurance Work?

Pet insurance can prove to be invaluable cover if your pet is injured or unwell and needs vet treatment. Vet bills can run into hundreds and even thousands of pounds, depending on your pet’s health issue, so having insurance can ease the financial burden.

But with various policies on the market it can be confusing knowing which type of cover is right for you.

Our detailed guide walks you through how pet insurance works, what is covered and what’s not, to help with your decision.

What is pet insurance?

Pet insurance is primarily a health insurance policy for animals. If your pet is injured or unwell and you take it to the vet, you can claim on your insurance for a portion of the vet bills and costs. Good pet insurance should cover costs such as X-rays, blood tests, medicines, surgery and other medical procedures. 

In some cases, non-medical expenses could also be covered, such as boarding costs for the animal if you have to go into hospital yourself, or a reward for locating a lost pet. Many policies pay out if your pet dies at a young age and lots of insurers offer a free vet helpline for customers who need advice.

There will usually be an excess on any claims. This is the first part of the claim that is deducted from the payout by the insurer, so you, the policyholder, must cover this cost. This will be expressed as a fixed sum of, say £100 or £200. You may have the option to increase the level of excess in return for a reduction in premiums.

In addition, many policies include a co-payment or cost-sharing clause, whereby you as the policyholder agree to pay a percentage of the claim once the excess has been deducted.

This is usually set at 10% or 20% and, again, is used as a way to keep premiums lower than they would otherwise be.

Types of pet insurance policy

There are different types or levels of pet insurance, from basic accident-only policies to more comprehensive lifetime cover, which can cover ongoing conditions throughout a pet’s life.

Non-lifetime pet insurance

Within non-lifetime pet insurance there are typically three cover options:

Accident-only: Covers only vet costs incurred as a result of an accident or injury. Some policies may extend to covering medical costs as a result of an illness that develops due to the injury. 

Many accident-only policies also cover third party liability in the event your pet causes damage to someone else’s property.

Time-limited: This cover puts a maximum time limit on claims for a particular condition, typically 12 months. 

As well as a time limit, this type of policy can also impose a maximum payout for each condition with a cap on the total claim. 

This means that, if a particular condition returns or is ongoing the cover will stop after 12 months, or if you reach your financial limit for that condition, whichever happens first. This could be problematic if your pet develops a more long-term or lifelong condition as you’re unlikely to be able to get cover elsewhere as insurers tend to exclude what are termed ‘pre-existing conditions’.

Maximum benefit: This is sometimes called ‘money limited’ or ‘condition capped’ cover. It allows you to continue to claim up to a set amount per injury, illness or condition, for as long as the money lasts (so it is not time limited). But once the maximum amount has been reached for a particular injury or illness, you can’t claim any more for that condition.

Lifetime pet insurance

Lifetime cover is the most comprehensive type of pet insurance policy, costing more than the non-lifetime cover options on offer for the same pet. 

It covers the cost of your pet’s treatment throughout its life, even for recurring conditions and illnesses. While most lifetime policies will impose an annual maximum claim limit per condition, such as £1,000, for example, this limit resets each year so owners can continue to claim for the same illnesses with their insurer, for as long as their pet needs treatment.

How does pet insurance work?

Once you’ve decided on the type and level of cover you want you’ll usually pay a monthly premium to insure your pet. If you have more than one pet, it may be possible to get a discount, typically around 15% on the cost, by insuring them on the same multi-pet policy.

If you need to claim on the cover (for example, your pet is unwell and you need to get a check up and medication from the vet), you will usually have to pay upfront for these costs and then claim the money back from your insurer. In some cases however, the insurer may deal directly with the vet to pay your costs.

The amount you can claim will depend on the specific terms of your policy (such as the maximum claim limits per year or per condition, for example). 

There will also usually be an excess on claims. This is the portion of the insurers’ claim payout which is deducted.

Example of a pet insurance claim

• You take your dog to the vet because it has eaten a plastic object which needs to be removed
• After surgery to remove the object, your total vet bill comes to £1,200
• You pay the vet and submit a claim to your insurer. You’ll need to submit the relevant paperwork, such as your pet’s medical records, the vets’ invoice as well as your receipts and proof of payment
• The insurer will review the claim and, if covered, you’ll be reimbursed up to your coverage limit. Your compulsory excess (plus any voluntary excess you may have agreed to) will be deducted from the payout, as will any co-payment/cost-sharing percentage
• By way of example, if you have a £250 excess and a £1,000 per year claim limit per injury or illness, under these policy terms you would receive £750 back under the claim (£1,000 annual limit minus the £250 excess). So in this case you would have to cover £450 of the total bill out of your own pocket (£1,200 minus £750)
• If the policy has a 20% co-payment clause, the £750 would be reduced by £150 to £600, so you’d need to pay the other £600 yourself.

What does pet insurance cover?

Pet insurance covers vets bills, subject to the terms of your policy, but it can also include a broad range of other benefits. That said, pet policies vary widely so always read the small print of your specific cover, including claim limits and exclusions, to avoid any nasty surprises later. Don’t assume you have cover for something before checking.

Among the things that many policies cover as standard are:

• Death of a pet by accident or illness: Many policies pay out a lump sum if your pet dies before a certain age, such as age 8 for example
• Third party liability: Covers potential legal costs if your dog injures someone or causes damage to property
• Lost pets: Cover to provide a reward for the successful return of a lost pet as well as for costs associated with putting up posters
• Dental cover: Most policies cover costs associated with dental treatment due to an accident, but not illness
• Kennel costs: Many policies pay out to cover kennel or cattery costs if you need to go into hospital for a time
• Cover abroad: If you take your pet overseas and it becomes unwell and needs vet treatment, most policies will cover this cost wherever you are in the world
• Euthanasia: Cover for having your pet put to sleep by the vet, and also cremation or burial costs.

What does pet insurance not cover?

Different pet policies will differ in their exclusions, but here are some of the most common things that won’t usually be covered under pet insurance:

• Pre-existing conditions: Insurers will want to know if your pet has any pre-existing conditions or illnesses as these won’t be covered under your plan
• Age limits: Insurers have different age limits at which they will refuse to cover an animal for the first time. This can also vary by species and breed. For example, some pedigree breeds of dog will find it hard to find a new insurer after they reach eight or 10 years of age
• Routine vaccinations and check ups: Jabs for new puppies and kittens and other routine vaccinations and worming and flea treatments, for example, aren’t covered under standard insurance plans 
• Pregnancy and birth: Most policies will exclude cover for any costs that arise due to your pet’s routine pregnancy and birth, although you may have cover for an illness that occurs as a result of the pregnancy. You also can’t usually get pet insurance for puppies and kittens until they are at least eight weeks old, and you would be unlikely to receive anything if, for example, the young were stillborn or health-compromised
• Neutering: Insurance doesn’t cover the cost of having your pet spayed or castrated, nor does it cover microchipping
• Dental treatment due to illness or decay: Policies tend to only cover dental treatment costs if it is as a result of an accident
• The waiting period: Your pet won’t be covered for any injuries or illnesses that arise in, typically, the first 14 days after taking out cover.

Can I get cover for exotic pets?

While standard pet insurance tends to cover dogs or cats, there are specialist pet insurance policies available for rabbits and other rodents and tortoises, as well as exotic pets, such as reptiles and birds. There is also equine insurance for horses and ponies.

The insurance cover will cover veterinary bills if your exotic pet is injured or unwell and needs treatment. There may also be cover for theft of your pet and third liability insurance. But as with standard insurance for dogs and cats, policies are likely to have maximum claims limits (either per year or per condition) and exclusions, depending on the type of cover you choose.

How much you’ll pay for cover will depend on multiple factors including the breed of exotic animal, any previous medical conditions and its age.

How much does pet insurance cost?

The cost of pet insurance will come down to the breed and age of your pet and the type of insurance policy you choose. Lifetime cover, which renews and continues to cover existing conditions, will usually cost more than non-lifetime cover, with accident-only cover being the cheapest (although it offers the least protection and cover for your pet).

Our research found lifetime cover, the most comprehensive type of pet insurance, starting from around £160 a year for a dog and around £90 annually for a cat. 

It’s important to note that the data we analysed was for premiums based on a young dog or cat (born January 2023) that has been spayed or neutered, microchipped, with up-to-date vaccines, no pre-existing conditions and which has not been the subject of any complaints or legal action.

Cover for an older animal with a history of medical issues can cost over £100 a month.

Premiums will also vary widely depending on the age and breed of your pet and also where you live in the country. This is because vet fees can be more expensive in certain areas, such as the south of England.

Is pet insurance worth it?

Vet bills for the treatment of your pet can run into hundreds and even thousands of pounds, depending on what is wrong. This is where pet insurance can prove invaluable as it will shoulder a lot of this cost.

If your pet develops an ongoing or even life-long condition, having lifetime pet insurance can mean you’ll have some help towards the continued costs of treating your pet.

How do I find a good pet insurance policy?

Shopping around and comparing different insurers and policies is a good way to find the right kind of cover to suit you and your pet. 

Bear in mind premiums will vary widely depending on the breed and age of the pet and the level of cover you want, with lifetime policies offering the most comprehensive coverage but typically costing more.